Efficient organizations use committees to get the work done. The proper committees will make it easier for the group to achieve their goals. We should think of committees as needing the same structure as boards. I have a form that has proven to be useful in documenting the terms of reference for a committee.
The topics that need to be covered are:
· What is the purpose of this committee?
· Who can be a member?
· How are members appointed?
· What are the responsibilities and authorities of this committee?
· Who does it report to?
· What is its budget?
· How often should they meet?
· What is quorum and when will these terms of reference be reviewed?
You can find the form HERE. If you use the form to document your committees everyone will have a better idea of who is doing what, which makes it easier to get the work done.
The recent report on diversity also spoke to term limits. 21% of public companies in Canada have term limits. The reason that term limits came up in the diversity report is that as directors leave the board, the hope is that their replacements are a more diverse group. In general, if a board has had the same group of people for the past 20 years, odds are that the group is mostly older white guys. This is an extreme example.
Most boards turn over more frequently than every 20 years. When you are trying to improve diversity on your board, term limits will play a role. Best practices has suggested that a board member should serve no longer than 3 terms of three years each. When you turn your board over more frequently, you have a better chance of improving diversity.
The Canadian Securities Administration monitors public companies in Canada. They are keeping an eye on gender diversity and report once a year. The reports’ full title is: Report on Fifth Staff Review of Disclosure Regarding Women on Board and in Executive Officer Positions. The report only talks about gender diversity. There is obviously more types of diversity than gender.
An organization should also consider including representation of persons with disabilities, visible minorities and indigenous peoples. A best practice is to consider the profile of the stakeholders of the organization and attempt to mirror this diversity on the board. If your stakeholders are mostly younger people then your board should include younger people. If half of your stakeholders are female then you need to have females on the board. We also talk about skills diversity and geographic diversity.
A board makes the best decisions when it has all the facts and points of view. A prudent board will attempt to have all the types of people and skills represented on the board.
The Canadian Securities Administration (CSA) monitors public companies in Canada. They are keeping an eye on gender diversity and report their findings once a year.
The report (which is actually called the Report on Fifth Staff Review of Disclosure Regarding Women on Board and in Executive Officer Positions) noted the following facts:
Improvements are being made, but the pace of change is slow. If we improve female participation of the board by 2% a year, then we will need another 17 years to get to 50%. The general population is about 50% female, so the boards should also be 50% female.